What I meant was, if you have to drive the headphones separately (if they can't plug into the same "spot" as the mic will, but I'm guessing that's not a problem if you have both the headset and the F1 hooked up), what kind of other audio outputs does your 360 have?

My Xbox goes optical into my receiver and then receiver optical to pioneer Dolby base unit,
It's like a mix amp I guess, and then a 3.5mm plug out to my F1's which gives me Dolby through the headphones. Then I have to plug the mic from a separate headset into the Xbox controller. This works now, but going to try the modmic into the controller with a 2.5 male to 3.5 female and see if this works or may have to plug directly to the Xbox 3.5 jack which is not being used. Hope that makes sense.

My Xbox goes optical into my receiver and then receiver optical to pioneer Dolby base unit,
It's like a mix amp I guess, and then a 3.5mm plug out to my F1's which gives me Dolby through the headphones. Then I have to plug the mic from a separate headset into the Xbox controller. This works now, but going to try the modmic into the controller with a 2.5 male to 3.5 female and see if this works or may have to plug directly to the Xbox 3.5 jack which is not being used. Hope that makes sense.

Yeah that makes sense, and I can't think of a better way to do what you're doing than what you've already got.

Update: Just wanted to let everyone know that the Modmic solution works great. I bought a 2.5mm male to 3.5mm female adapter at Radio Shack that plugs into my XBOX 360 controller to the modmic and then mounted the modmic on my Sony MDR F1's. It's pretty neat, comes on and off with a small magnet. I was previously using a headset that came with the XBOX and the first thing my buddies say is, "Wow, I can hear you so much better now, what did you do?"

There were actually three different 2.5 to 3.5 connectors at Radio Shack, and I bought all three to see what would work. The stereo to stereo option did not work, but the mono to stereo one did.